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August 13, 1999

Real Estate Buzz

By MARC STILES
Journal Real Estate editor

Purveyors of commercial real estate who want to work with Microsoft typically have to keep quiet about the dealings of The Most Important Company In The History of the World, which is how the company defines itself to its employees.

Such is not the case for Redmond City Hall bureaucrats answering inquiries about Metzler North America's 610,000-square-foot LakeRidge Square project that is under construction on almost 16 acres at Northeast 40th Street and 148th Avenue Northeast. Even though everyone is almost certain that Microsoft is the tenant for the $107 million project, it's been mum's the word from Metzler officials and their project brokers at Pacific Real Estate Partners.

Speculators are left to wait for the tenant improvement permit applications at City Hall. One Redmond Building Department official said that while no application had been submitted, there have been numerous discussions about the project in the office.

"Our understanding is Microsoft is poised to lease most if not all of that space," he said. But since no application had been filed, there were no specifics for him to talk about.

B & O Espresso owner Mahed Lukatah has bought one of two commercial spaces in one of Seattle's grooviest residential projects -- The Monique. Evidently, he plans to open a tapas bar there. At least he mentioned tapas, which means appetizers in Spanish, before declining to expound.

He politely explained that he just bought the space so back off already. "Really, I can't say much about it because there's not much to talk about."

The Monique is a Capitol Hill project by Kauri Investments, which is turning an abandoned furniture warehouse into industrial-like condominiums. Kauri bought the four-story building at 11th and Pike for $1.5 million from Bruce Pavitt, founder of the Sub Pop record label.

Kauri is investing $3 million into the renovation. Workers are leaving the graffiti and other marks on the inside walls with the goal of ending up with a raw feel to the place. The philosophy is to not rob the place of its character.

Scott Nodland, senior project manager for Kauri, said there is one other commercial space available. It may, however, be converted into an artist live/work space, he added.

As for presales of the condos, there has been none. That's by design. First of all, Nodland explained that under the purchase agreement Kauri must give Pavitt the first pick of units. Secondly, Kauri isn't worried about the market fading anytime soon.

Marketing will begin after Jan. 1. "We have faith in the strength of the market," Nodland added. "I think you either have faith or you have presales."

Down in the Rose City, the Big Pink is on the sale block.

The Daily Journal of Commerce in Portland reported recently that U.S. Bank wants to concentrate more on serving customers than managing real estate. So it will sell the landmark, 42-story U.S. Bancorp Tower at 111 S.W. Fifth Ave. and lease space from whoever buys it.

U.S. Bank officials said they plan to hire real estate consultants to help select a broker. The process will take several months and bank officials do not expect to close the deal until sometime in 2000.

Howard S. Wright Construction built the building in 1983, and it was renovated three years ago. The 750,000 square feet of space is 98 percent full, and leases go for between $19.95 and $24 a foot.



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